Cash sales for houses are becoming more and more popular these days, especially with all of the iBuyer and “We Buy Houses” companies that are in every city. While cash sales have declined somewhat in the last year, they still hover around 20% of all home sales nationwide. So are there really any benefits to accepting an all cash offer for your home? Lets take a look.
The Two Main Benefits Of Selling For Cash
If you have ever sold a home before with a regular buyer that gets a loan, you know the entire process can be a real headache. The first and biggest being that the buyer may not be able to qualify for a loan. We have seen it before, even with a pre-approved loan. The buyer may have already been pre-qualified, then moves onto the next step and is pre-approved, but does something like gets another credit card, or buys a new car. Anything that can potentially effect their credit while they are trying to purchase a home can make the sale fall through, and maybe at the last minute. With a cash buyer there are no loans, banks or mortgage companies to deal with.
The second benefit is that since there are no loans, there are no appraisals. If your property doesn’t appraise for your asking price it can turn into a road block:
One of the biggest stumbling blocks with financing can be the appraisal. Appraisals are not cast in stone.
The most common method is reliance on comparable sales, known as the comparative method, which involves choosing several properties and comparing those values to the property in question, adjusting upward or downward for upgrades, location, amenities and features. If a home does not appraise for the purchase price and the buyer is obtaining a loan that requires a 20 per cent down payment, the lender will not lend more than the appraised value unless the buyer coughs up more cash or the seller discounts the price.
There are other options for dealing with a low appraisal, but they can also spell contract cancellation.
So no loans or buyer qualifications, or your house not appraising for your asking price and the loan being denied are eliminated by using a cash buyer.
You Sell Your House “As-Is”
This is can be a real benefit to some sellers, especially if they have not maintained their property. Another type of seller that this can benefit is someone that has inherited a property. The property inherited may have belonged to a hoarder, or again, may not have been properly maintained.
PJ Mitchell has this to add about selling as is:
If you’re in a hurry, or don’t have cash-on-hand, the idea of doing all the things – little and big – needed to maximize your home’s value may not be practical. Cash sales are “as is.” You still need to disclose any known defects or issues – but it will be up to the next guy to fix them. If you know your home needs major repairs, and are not in a position to do them, an all-cash offer may be the way to go.
It is important to take note of what PJ says about disclosing known defects or issues. Selling as is doesn’t mean that you don’t have to disclose that the foundation is cracked and falling down a hill.
More Sales Make It To The Closing Table
As we mentioned before, the buyer may have a problem at the last minute and may not be able to get financing. This can be a real pain for sellers because you then have to start all over again – showing the home and finding another buyer.
A cash sale also removes the all-too-familiar drill of accepting an offer only to lose the buyers at the last minute when they can’t qualify for a loan. Once the cash is passed along, there’s no backing out or last-second cold feet. Such cash sales typically close in 1 to 3 weeks compared to about 4 to 7 weeks on a conventional sale. Also, cash sales are typically “as is,” so there’s usually no major repainting and repairs needed.
BankRate makes an excellent point that a cash sale can happen very fast. If you are dealing with a reputable company the closing can happen in as little as just 1 week.
Summing It Up
Selling for cash can absolutely be a plus. Recap:
- Buyers don’t have to qualify for a loan, only to be denied at the last minute and you the seller having to start over again.
- No appraisals – you the seller don’t have to be concerned about the property not appraising for your asking price.
- Selling “As Is” – no having to make costly repairs.
- Close in days instead of possibly running into months.
If you have a house in Douglasville, Lithia Springs or anywhere in the Douglas County area that you want to sell and are looking for a reputable company that buys houses for cash give us a call at (770) 756-8680 or reach out to us via our website to complete a brief form and we will get back to you shortly.